Most recently, the term efficiency bubble has been used to describe the industry obsession with “getting more efficient at delivering average”, and focusing on the efficient delivery of media over the achievement of business objectives.
At an Analytics Committee meeting of IAB Southeast Asia and India, I raised the question whether (Digital) Analytics has gotten us into this efficiency bubble.
Have we focused too much on what is easy to measure – clicks – instead of what is important? And what can Analytics do to help?
A number of key themes emerged from the discussion.
Everyone accepts the issue.
Marketers are being held more accountable, returns have to be delivered faster, nobody seems to have time to wait for the outcomes of a 6-month long study.
There are a lot of metrics which are easy to measure – whether they matter or not – and all of this leads to a focus on the short-term.
Analytics is what you do with it.
But Analytics wasn’t seen to deserve the bulk of the blame.
Analytics answers the questions it is being asked.
It doesn’t, per se, lead to short termism or efficiency over effectiveness.
From multi-touch attribution to econometric modelling or conversion lift studies, analytics could equally shed light on effectiveness, and longer-term growth.
Analytics, ultimately, can do the bidding for whoever pays the bills, and if that is a more short-term incentivised team, then analytics will give short-term incentivised recommendations. Hence, shared KPIs and organisational structure and culture matter.
But: Marketing effectiveness is much harder to measure than media efficiency.
“We’ve all gotten a bit lazy, looking at our dashboards”.
It is a lot easier to operate last click attribution and report media efficiency metrics as if they mattered most, than untangling marketing effectiveness and the impact of activities over time. To find out what maximises profit in the long run takes longer, and requires technology, data and marketing capabilities that not everyone has.
Mark Ritson’s summary of what marketers can learn from Direct Insurance’s IPA winning paper shows how this might look like.
But this requires investment in technology, data and analytics professionals who can see the wood, and not merely the trees.
So what does it take for Analytics to help break the efficiency bubble?
1. Analytics should be neutral and aligned to business objectives, not channels.
It is analytics’ role to voice out the biases in measurement approaches.
Balanced scorecards and shared KPIs help to balance short- and long-term, efficiency and effectiveness.
2. Analytics needs to speak the language of marketing, tech – and finance
Perhaps, as all marketing becomes digital, digital marketing analytics will become closer to business analytics.
3. The pendulum might be swinging back to an integrated approach, lead by those companies who are most savvy in data-driven marketing and ‘performance’.
The former Jetstar CEO recently spoke about how “the digital economy’s ability to spin-off a wild array of easy-to-capture metrics has warped companies into a false sense of what is working for business value creation.” and reports of hundreds of millions of dollars that are swinging back away from the bottom funnel.
Jeff Bezos, recently had a change of heart towards advertising – Amazon is one of the biggest advertising spenders in the US.
With companies known for ‘performance’ and data-driven marketing leading the charge for integration, one can assume this was not because of somebody’s gut feel, but because analytics doing all of the above, helped proved that it made financial sense.
Lazy (digital) marketing and analytics might have played a role in getting us into this mess.
But sophisticated (digital) marketing and analytics has the power to get us out of it.
This piece was written by IAB Southeast Asia and India (IAB SEA+India) Analytics Committee Member Thomas Wagner, Head of Planning, BBH Singapore.